EU wins court green light to start airline emissions charges

(BRUSSELS) - Europe pledged Wednesday to press on with new
charges for airline carbon emissions across its airspace as of January
1, after scoring a key victory over US rivals in the EU's top court.

The
decision was welcomed as vindication by the European Union, which told
US airlines to get ready to obey the law in the same way EU companies
respect American regulations.

But it was not without collateral
damage, with industry sources fearing a possible trade war after US
Secretary of State Hillary Clinton warned of reprisals ahead of the
ruling.

A high-ranking source in the aviation sector told AFP that
"the court's judgment risks unleashing a trade war between Europe and
the United States."

The US government itself, while not a party to
the court case brought by north American airlines and industry bodies,
said it maintained "strong legal and policy objections."

The
airlines had challenged an EU decision to include as of next year all
carriers in a carbon trading system targeting heavy polluting industries
as part of the EU's efforts against climate change.

US and Canadian carriers had argued that the decision was discriminatory and amounted to a backdoor tax.

But
the European Court of Justice ruled that the EU's approach was "valid,"
and that it "infringes neither the principles of customary
international law at issue nor the Open Skies Agreement" covering
trans-Atlantic flights.

Despite Clinton's threat to respond with
"appropriate action," the Luxembourg-based judges said that non-EU
airlines could "choose" whether to make commercial flights to and from
EU airports.

As a result, the EU system "infringes neither the
principle of territoriality nor the sovereignty of third states, since
the scheme is applicable to the operators only when their aircraft are
physically in the territory of one of the member states of the EU."

Furious
carriers say their inclusion in the Emissions Trading System (ETS)
violates international aviation pacts, but the European Commission said
after the ruling that the ETS would come into force as scheduled.

"A
number of American airlines decided to challenge our legislation in
court and thus abide by the rule of law," said EU climate change
commissioner Connie Hedegaard.

"So now we expect them to respect European law," she underlined.

In
a letter to EU officials dated December 16, Clinton listed 43 nations
from Argentina to Russia to Venezuela also opposed to the EU move.

"Halt or, at a minimum, delay or suspend application of this directive," she wrote. "Re-engage with the rest of the world.

"The
United States stands ready to engage in such an effort. Absent such
willingness on the part of the EU, we will be compelled to take
appropriate action."

Already in October, the US House of
Representatives passed a bill directing the US government to forbid US
carriers to take part "in any emissions trading scheme unilaterally
established by the European Union."

Chinese and Indian airlines said earlier this year they too could launch similar cases.

Underscoring
the potential for a significant trade row, China reportedly blocked an
order by Hong Kong Airlines for billions of euros worth of Airbus
aircraft.

Airbus and rival US planemaker Boeing have locked horns
in a seven-year-long battle over government subsidies at the World Trade
Organization.

Under the EU scheme, airlines would have to pay for
15 percent of the polluting rights accorded to them in 2012, the figure
then rising to 18 percent between 2013 and 2020.

In a statement
issued in Brussels, a transportation official in the US State
Department, Krishna Urs, said Washington maintained "strong legal and
policy objections to the inclusion of flights by non-EU air carriers in
the EU ETS."

Urs added that the judges were "hampering progress"
towards a global solution on aviation's role in mitigating harmful
climate emissions.